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BALTIMORE (Stockpickr) -- Forget the traditional ways of generating investment ideas. Instead, let the crowd do it for you.
From hedge funds to individual investors, scores of market participants are turning to social media to figure out which stocks are worth watching. It’s a concept that’s known as “crowdsourcing,” and it uses the masses to identify emerging trends in the market.
Crowdsourcing has long been a popular tool for the advertising industry, but it makes a lot of sense as an investment tool, too. After all, the market is completely driven by the supply and demand, so it can be valuable to see what names are trending among the crowd.
While some fund managers are already trying to leverage social media resources such as Twitter to find algorithmic trading opportunities, for most investors, crowdsourcing works best as a starting point for traders who want a starting point in their analysis. Today, we’ll leverage the power of the crowd to take a look at seven of the highest-trending stock searches on Google (GOOG).
Here’s a look at how these most searched names are trading technically.
Nearest Resistance: $84.50
Nearest Support: $77.50
Catalyst: Positive Earnings
Shipping giant FedEx (FDX) is moving approximately 5% higher today on strong quarterly earnings results. The firm saw its second-quarter profits jump 76% on the strength of its ground shipping business, a unit that’s previously been a source of frustration for investors. FedEx is currently in a horizontal channel that makes this stock very tradable.
It’s important to realize that while today’s move in FedEx is large, it’s not material. In other words, it’s a move within a channel -- traders should wait for a move outside of the channel before making a bet on shares. The best way to approach this name is to wait for FedEx to break outside of the horizontal range of $77.50 to $84.50. When that move happens, take the trade in the direction of the breakout.
Either way the breakout ultimately materialized, I’d recommend keeping a protective stop back just within the channel.
Nearest Resistance: $40
Nearest Support: N/A
Catalyst: Poor Guidance
Meanwhile, the opposite kind of day is taking place in shares of First Solar (FSLR). Shares of the mid-cap solar module maker are down nearly 7% on yesterday’s guidance numbers, which came below analyst estimates. The solar industry has been under considerable pressure for most of 2011, shoved lower as demand dissipates from major solar buyers in the eurozone. (It's been one of the 10 Worst-Performing S&P 500 Stocks.)
Yesterday, shares fell through ultimate support at $40, plunging into new all-time lows. That breakdown below support makes FSLR a good short candidate, even if shares have given up considerable ground already.
A short on this name is an excellent way to take advantage of weakness in the broad market. Keep a protective stop pegged around that newfound $40 resistance level.
Nearest Resistance: $40
Nearest Support: $32.50
Catalyst: Earnings Miss
VeriFone Systems (PAY) is having a difficult month. The electronic payment provider has underperformed the S&P 500 by more than 10% since the middle of November -- and from a technical standpoint, it doesn’t look like this stock is due for a turnaround any time soon. Yesterday’s earnings numbers came in below analysts’ consensus estimate for the quarter.
Shares are breaking down below the $40 level in today’s trading session, a move that traders should be treating as a sell signal. VeriFone’s inability to hold previous support at $40 indicates that sellers have just absorbed whatever semblance of demand there had been below that price.
The stock’s closest support level at $32.50 represents a reasonable downside target for the mid-term. A stop at that $40 resistance level makes sense for PAY.
VeriFone shows up on a recent list of 4 Stocks Set for Next-Gen Mobile Boost.
Nearest Resistance: $17.50
Nearest Support: $16
Catalyst: Management Shakeup
Cosmetics firm Avon Products (AVP) is settling from the 5% gain shareholders got yesterday following news that the firm would be searching for a new chief executive. Veteran CEO Andrea Jung will be transitioning to a role on the board.
The news has provided some hope for investors, who’ve seen Avon nearly halve in value in 2011. From a technical standpoint, it looks like this stock may finally be basing.
From a technical standpoint, Avon is forming a double bottom with support at $16. Traders should wait for AVP to push above the $17.50 resistance level set yesterday before going long Avon. Rising RSI is providing some added confirmation of a potential up move; when the buy triggers, consider a protective stop at $16.
Nearest Resistance: $43
Nearest Support: $36-$37
Not surprisingly, shares of Novellus are rallying more than 21% on the news -- and Lam is down more than 4% as investors wring their hands about potential risks of the merger. As an all-stock deal, the two stocks are essentially going to trade in lock step with one another for the foreseeable future.
With LCRX coming up on a key support level in the $36 to $37 range, this could be a good opportunity for traders to buy a bounce in the next few market sessions.
Lam Research shows up on a recent list of 7 Stocks JPMorgan Thinks You Should Buy.
SPDR Gold Trust ETF
Nearest Resistance: $157.50
Nearest Support: $145
Catalyst: Flight to Quality
Gold’s been getting hammered in December, the SPDR Gold Trust ETF (GLD) falling more than 10% through an ironic mix of equity buying and flight to quality.
For months, gold was tied with treasuries as the “flight to quality” asset of choice -- but that changed when the Fed announced Operation Twist back in September. Now the combination of a brief equity rally at the start of the month and a flight to quality back into Treasuries is sparking a selloff in gold.
Surprising as the selloff may seem for most traders, it’s important to follow the technical cues on this stock before buying into the macro case for owning this metal. Wait for shares to base -- potentially around $145 support -- before looking for a buying opportunity in this name. For now, gold remains in slide mode.
Nearest Resistance: $42
Nearest Support: $38
Catalyst: Earnings Miss
Equipment manufacturer Nordson (NDSN) was another name that posted an earnings miss in today’s trading session, causing close to a 9% drop in shares as of this writing. Nordson’s chart may look bearish at the moment, but the downside looks short-term at best right now.
That’s because even though Nordson pushed through former support at $42, a much stronger support level at $38 should act as a “floor” for this stock in the near-term. Traders who missed the initial break of $42 may as well wait it out for a bounce off of that more significant support level.
In the meantime, I’d recommend sitting on the sidelines while this name plays itself out.
To see these stocks in action, check out the at Most-Searched Stocks portfolio on Stockpickr.
-- Written by Jonas Elmerraji in Baltimore.
At the time of publication, author had no positions in stocks mentioned.
Jonas Elmerraji, based out of Baltimore, is the editor and portfolio manager of the Rhino Stock Report, a free investment advisory that returned 15% in 2008. He is a contributor to numerous financial outlets, including Forbes and Investopedia, and has been featured in Investor's Business Daily, in Consumer's Digest and on MSNBC.com.